[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5707 Introduced in House (IH)]

112th CONGRESS
  2d Session
                                H. R. 5707

  To amend part B of title XVIII of the Social Security Act to reform 
     Medicare payment for physicians' services by eliminating the 
    sustainable growth rate system and providing incentives for the 
 adoption of innovative payment and delivery models to improve quality 
                            and efficiency.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 9, 2012

    Ms. Schwartz (for herself, Mr. Heck, Mrs. Christensen, and Mr. 
  Courtney) introduced the following bill; which was referred to the 
Committee on Energy and Commerce, and in addition to the Committees on 
    Ways and Means and the Budget, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
  To amend part B of title XVIII of the Social Security Act to reform 
     Medicare payment for physicians' services by eliminating the 
    sustainable growth rate system and providing incentives for the 
 adoption of innovative payment and delivery models to improve quality 
                            and efficiency.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; PURPOSE.

    (a) Short Title.--This Act may be cited as the ``Medicare Physician 
Payment Innovation Act of 2012''.
    (b) Purpose.--The purpose of this Act is to reform the system of 
Medicare payment for physicians' services--
            (1) by ending the application of the sustainable growth 
        rate (SGR) system;
            (2) to stabilize payments for 2013;
            (3) to promote the rapid development and implementation of 
        alternative improved payment and delivery models that 
        incentivize high quality, high-value care; and
            (4) to provide continuing incentives for physician adoption 
        of such alternative payment and delivery models.

SEC. 2. MEDICARE PHYSICIAN PAYMENT REFORM.

    (a) Repeal of SGR Payment Methodology.--Section 1848 of the Social 
Security Act (42 U.S.C. 1395w-4) is amended--
            (1) in subsection (d)--
                    (A) in paragraph (1)(A), by inserting ``or a 
                subsequent paragraph'' after ``paragraph (4)''; and
                    (B) in paragraph (4)--
                            (i) in the heading, by striking ``years 
                        beginning with 2001'' and inserting ``2001, 
                        2002, and 2003''; and
                            (ii) in subparagraph (A), by striking ``a 
                        year beginning with 2001'' and inserting 
                        ``2001, 2002, and 2003''; and
            (2) in subsection (f)--
                    (A) in paragraph (1)(B), by inserting ``through 
                2012'' after ``of such succeeding year'' ; and
                    (B) in paragraph (2), by inserting ``and ending 
                with 2012'' after ``beginning with 2000''.
    (b) Stabilizing 2013 Payment Rates at Current Level.--
            (1) In general.--Subsection (d) of section 1848 of the 
        Social Security Act (42 U.S.C. 1395w-4) is amended by adding at 
        the end the following new paragraph:
            ``(14) Update for 2013.--In lieu of the update to the 
        single conversion factor established in paragraph (1)(C) that 
        would otherwise apply for 2013, the update to the single 
        conversion factor shall be 0 percent for 2013.''.
            (2) Technical amendment.--Effective for years beginning 
        with 2013, section 1848(m)(7)(C)(i) of the Social Security Act 
        (42 U.S.C. 1395w-4(m)(7)(C)(i)) is amended by inserting ``, the 
        program of Osteopathic Continuous Certification of the American 
        Osteopathic Association,'' after ``Specialties Maintenance of 
        Certification program''.
    (c) Establishment of Differential Updates Beginning With 2014 To 
Promote Access to Primary Care Services.--
            (1) Establishment of service categories.--Subsection (j) of 
        section 1848 of the Social Security Act (42 U.S.C. 1395w-4) is 
        amended by adding at the end the following new paragraphs:
            ``(5) Service categories.--
                    ``(A) In general.--For services furnished on or 
                after January 1, 2014, each of the following categories 
                of services shall be treated as a separate `service 
                category':
                            ``(i) Primary care.--Primary care services 
                        (as defined in subparagraph (B)) furnished by a 
                        qualifying practitioner.
                            ``(ii) Other services.--Other physicians' 
                        services.
                    ``(B) Primary care services.--In this subsection, 
                the term `primary care services' means services 
                identified, as of April 1, 2012, with the following 
                HCPCS codes (and as subsequently modified by the 
                Secretary):
                            ``(i) Office and outpatient visits.--99201 
                        through 99215.
                            ``(ii) Hospital observational services.--
                        99217 through 99220.
                            ``(iii) Hospital inpatient visits 
                        services.--99221 through 99239.
                            ``(iv) Nursing home, domiciliary, rest home 
                        or custodial care visits.--99304 through 99340.
                            ``(v) Home service visits.--99341 through 
                        99350.
                            ``(vi) Welcome to medicare visit.--G0402.
                            ``(vii) Annual wellness visits.--G0438 and 
                        G0439.
                    ``(C) Inclusion of preventive services.--Such term 
                also includes preventive services described in section 
                1861(ddd)(3) and additional preventive services 
                described in section 1861(ddd)(1).
                    ``(D) Inclusion of additional services.--Such term 
                also includes services, such as care coordination 
                services, telemedicine services, non-face-to-face care 
                management services, preparation and supervision of 
                long-term care plans, home care plan oversight 
                services, and similar services that the Secretary 
                identifies, by regulation, as being similar to the 
                services described in subparagraph (B) or (C).
            ``(6) Qualifying practitioner.--The term `qualifying 
        practitioner' means, with respect to the furnishing of primary 
        care services, an individual--
                    ``(A) for whom primary care services has accounted 
                for at least 60 percent of the allowed charges under 
                this part (not counting any such charges attributable 
                to in-office clinical laboratory services) in a prior 
                period as determined by the Secretary; or
                    ``(B) who does not have claims under this part 
                during such a prior period and whom the Secretary 
                determines is likely to meet the requirement of 
                subparagraph (A) for the subsequent period.''.
            (2) Establishment of separate conversion factors for each 
        service category.--Section 1848(d)(1) of the Social Security 
        Act (42 U.S.C. 1395w-4(d)(1)) is amended--
                    (A) in subparagraph (A)--
                            (i) by designating the sentence beginning 
                        ``The conversion factor'' as clause (i) with 
                        the heading ``Application of single conversion 
                        factor.--'' and with appropriate indentation;
                            (ii) by striking ``The conversion factor'' 
                        and inserting ``Subject to clause (ii), the 
                        conversion factor''; and
                            (iii) by adding at the end the following 
                        new clause:
                            ``(ii) Application of multiple conversion 
                        factors beginning with 2014.--
                                    ``(I) In general.--In applying 
                                clause (i) for each year beginning with 
                                2014, separate conversion factors shall 
                                be established for each service 
                                category of physicians' services (as 
                                defined in subsection (j)(5)(A)) and 
                                any reference in this section to a 
                                conversion factor for such years shall 
                                be deemed a reference to the conversion 
                                factor for each of such categories.
                                    ``(II) Initial conversion 
                                factors.--Such factors for 2014 shall 
                                be based upon the single conversion 
                                factor for the previous year multiplied 
                                by the update established under 
                                paragraph (15) for such category for 
                                2014.
                                    ``(III) Updating of conversion 
                                factors.--Such factor for a service 
                                category for a subsequent year shall be 
                                based upon the conversion factor for 
                                such category for the previous year and 
                                adjusted by the update established for 
                                such category under paragraph (15) or a 
                                subsequent paragraph for the year 
                                involved.''; and
                    (B) in subparagraph (D), by striking ``other 
                physicians' services'' and inserting ``for physicians' 
                services in the service category described in 
                subsection (j)(5)(A)(ii))''.
            (3) Establishment of separate updates for conversion 
        factors for each service category.--Section 1848(d) of the 
        Social Security Act (42 U.S.C. 1395w-4(d)), as amended by 
        subsection (b), is amended by adding at the end the following 
        new paragraph:
            ``(15) Updates by service category beginning with 2014; 
        updates for 2014 through 2017.--In applying paragraph (4) for 
        each year beginning with 2014, the following rules apply:
                    ``(A) Application of separate update adjustments 
                for each service category.--Pursuant to paragraph 
                (1)(A)(ii)(I), for each year beginning with 2013, the 
                update shall be made to the conversion factor for each 
                service category (as defined in subsection (j)(5)(A)).
                    ``(B) Updates for 2014 through 2017.--The updates 
                for 2014, 2015, 2016, and 2017 for the conversion 
                factor for the services category described in--
                            ``(i) subsection (j)(5)(A)(i) shall be 2.5 
                        percent; and
                            ``(ii) subsection (j)(5)(A)(ii) shall be 
                        0.5 percent.''.
    (d) Promoting Testing and Evaluation of New Payment and Delivery 
Models (Phase I).--
            (1) Expansion of testing in multiple geographic regions.--
        Section 1115A(a)(5) of the Social Security Act (42 U.S.C. 
        1315a(a)(5)) is amended by inserting before the period at the 
        end the following: ``, but shall (to the maximum extent 
        feasible) including testing of each such model in geographic 
        areas in at least 3 regions''.
            (2) Inclusion of physician implementation costs in 
        evaluations.--Section 1115A(b)(4)(A) of the Social Security Act 
        (42 U.S.C. 1315a(b)(4)(A)) is amended--
                    (A) by striking ``and'' at the end of clause (i);
                    (B) by striking the period at the end of clause 
                (ii) and inserting ``; and''; and
                    (C) by adding at the end the following new clause:
                            ``(iii) the average cost, per physician, of 
                        implementation of the model.''.
            (3) Accelerating testing and evaluation process.--Section 
        1115A(b) of the Social Security Act (42 U.S.C. 1315a(b)) is 
        amended by adding at the end the following new paragraph:
            ``(5) Timing.--The Secretary, acting through the Center, 
        shall conduct activities under this subsection in such a timely 
        manner so that evaluations of initial models can be initially 
        completed so that physicians can begin to transition to 
        implementation of such models beginning not later than January 
        1, 2017.''.
            (4) Involvement of provider groups in selection of 
        models.--Section 1115A(b)(4) of such Act is amended by adding 
        at the end the following subparagraph:
                    ``(D) Involvement of provider groups in model 
                selection.--The Secretary shall consult and work 
                closely with physician and other provider groups in the 
                selection of models under this subsection and 
                subsection (c).''.
            (5) Use of other models.--Section 1115A of such Act is 
        further amended--
                    (A) by adding at the end of subsection (b)(4) the 
                following new subparagraph:
                    ``(E) Use of other models.--Nothing in this section 
                shall be construed as preventing the Secretary from 
                selecting, for expansion under subsection (c), a model 
                that was not tested under this subsection.''; and
                    (B) in subsection (c), by inserting ``or other 
                model'' after ``section 1866C''.
            (6) GAO review and study.--The Comptroller General of the 
        United States shall conduct a study of the evaluations made 
        under subsection (b) of section 1115A of the Social Security 
        Act, as amended by this section. Such study shall include an 
        analysis of the alternative payment and delivery models 
        identified under such section for payment for physicians' 
        services (and other services) under the Medicare program. Not 
        later than April 1, 2016, the Comptroller General shall submit 
        a report to Congress on such study and shall include in the 
        report such recommendations as the Comptroller General deems 
        appropriate for--
                    (A) changes in the development and implementation 
                process under such section; and
                    (B) alternative payment and delivery models 
                identified under such section as being appropriate for 
                expansion under subsection (c) of such section.
            (7) Publication of list of successful models.--Beginning on 
        October 1, 2016, and each year thereafter, the Secretary of 
        Health and Human Services shall publicly release a 
        comprehensive list of such health care delivery and payment 
        models identified, under section 1115A of the Social Security 
        Act or otherwise, as meeting (or likely to meet) the 
        requirements of subsection (c)(1) of such section. Such list 
        shall include at least 4 health care delivery and payment 
        models and may include models not tested under subsection (b) 
        of such section.
            (8) Considerations.--The Comptroller General in making 
        recommendations under paragraph (6) and the Secretary in 
        releasing the list of models under paragraph (7) shall take 
        into account variations among providers in size, specialty mix, 
        case mix, and patient demographics, as well as regional health 
        care infrastructure variations and variations in cost of living 
        among areas, and shall specifically consider appropriate 
        variations that take into account the special circumstances of 
        providers in rural and other underserved areas.
    (e) Implementation of Payment and Delivery Model Options (Phase 
II).--
            (1) In general.--Based on the report of the Comptroller 
        General under subsection (d)(4) and not later than October 1, 
        2016, the Secretary of Health and Human Services shall provide 
        information to physicians, nurse practitioners, group practices 
        and institutions employing Medicare part B providers on how 
        best to transition to alternative health care delivery and 
        payment models that are aimed at improving the coordination, 
        quality and efficiency of health care, including those 
        developed under section 1115A or 1866E of the Social Security 
        Act (42 U.S.C. 1315a, 1395cc-5).
            (2) Increasing flexibility in implementation.--Section 
        1115A(c) of the Social Security Act (42 U.S.C. 1315a(c)) is 
        amended by inserting after ``through rulemaking'' the 
        following: ``(which may include the issuance of interim, final 
        rules) or through publication of a directive or other 
        guidance''.
            (3) Timing.--Such section is further amended by adding at 
        the end the following: ``The Secretary shall seek to effect 
        such expansion to the maximum extent feasible so that 
        physicians may begin to transition to implementation of such 
        models beginning not later than January 1, 2017.''.
    (f) Transition During 2018.--
            (1) Freeze in fee schedule for 2018.--Subsection (d) of 
        section 1848 of the Social Security Act (42 U.S.C. 1395w-4), as 
        amended by subsections (b) and (c)(3), is amended by adding at 
        the end the following new paragraph:
            ``(15) Update for 2018.--The update to both of the 
        conversion factors for 2018 shall be 0 percent.''.
            (2) Expanded assistance through regional extension centers 
        and other qualified entities.--Section 1115A(d) of the Social 
        Security Act (42 U.S.C. 1315a(d)) is amended by adding at the 
        end the following new paragraph:
            ``(4) Assistance in implementation.--
                    ``(A) In general.--Using funds available under 
                subsection (f)(1) and consistent with this paragraph, 
                the Secretary shall enter into contracts and agreements 
                with regional extension centers, in coordination with 
                the National Coordinator for Health Information 
                Technology, and other appropriate entities to provide 
                guidance and assistance on how physicians may 
                transition to implementation of alternative health care 
                delivery models identified as representing best 
                practices under this section.
                    ``(B) Dedicated funding.--
                            ``(i) In general.--Of the amounts available 
                        under subsection (f)(1)(B), the Secretary shall 
                        make $720,000,000 available to the Office of 
                        the National Coordinator for Health Information 
                        Technology for the awarding of grants and 
                        incentive payments under a competitive process 
                        to regional extension centers (receiving 
                        funding under section 3012(c) of the Public 
                        Health Service Act) and other qualified 
                        entities for activities described in 
                        subparagraph (A). Such grants and payments 
                        shall not be available for assistance after 
                        December 31, 2018.
                            ``(ii) Process.--Under clause (i), the 
                        Office shall--
                                    ``(I) establish a competitive 
                                selection process for the selection of 
                                regional extension centers (and other 
                                qualified entities) in the third 
                                quarter of 2014; and
                                    ``(II) provide for the initial 
                                distribution of funds to such centers 
                                and entities by January 1, 2015.
                            ``(iii) Collaboration.--The Center shall 
                        collaborate with the Office in providing 
                        direction to such centers and entities in 
                        conducting activities under this paragraph, 
                        including the development of performance 
                        benchmarks based on provider participation and 
                        progress toward integration.
                            ``(iv) Priority.--The grants and incentive 
                        payments under this subparagraph shall be 
                        directed to target assistance to solo and small 
                        specialty practices as well as community health 
                        centers and similar providers of primary care 
                        services.''.
    (g) Continuing Incentives for Physicians Providing High-Quality, 
High-Value Care.--
            (1) Fee schedule adjustments.--Subsection (d) of section 
        1848 of the Social Security Act (42 U.S.C. 1395w-4), as amended 
        by subsections (b), (c)(3), and (f), is amended by adding at 
        the end the following:
            ``(17) Updates for 2019 through 2022.--
                    ``(A) In general.--Except as provided in this 
                paragraph, the update to each of the conversion 
                factors--
                            ``(i) for 2019 shall be minus 2 percent;
                            ``(ii) for 2020 shall be minus 3 percent;
                            ``(iii) for 2021 shall be minus 4 percent; 
                        and
                            ``(iv) for 2022 shall be minus 5 percent.
                    ``(B) Treatment of services paid using alternative 
                payment and delivery models.--In the case of 
                physicians' services for which payment is covered under 
                an alternative payment and delivery model, such as 
                those implemented under section 1115A, subparagraph (A) 
                does not apply.
                    ``(C) General exemption.--The Secretary shall, by 
                regulation, exempt a provider from the application of 
                the negative payment update specified in subparagraph 
                (A) for a year if the Secretary determines that--
                            ``(i) the provider--
                                    ``(I) is a meaningful EHR user (as 
                                determined under subsection (o)(2) with 
                                respect to the year); and
                                    ``(II) meets the qualifications 
                                under subparagraph (B) of subsection 
                                (m)(7) (relating to additional 
                                incentive payments) for an additional 
                                incentive payment under subparagraph 
                                (A) of such subsection (which includes 
                                satisfactory participation in the 
                                quality reporting system and 
                                participation in an approved 
                                Maintenance of Certification program); 
                                or
                            ``(ii) the payment modifier for the 
                        provider under subsection (p), which is based 
                        upon the performance of the provider on 
                        measures of quality of care furnished compared 
                        to cost and which is expressed as a percentage 
                        of payment, is within the top 25 percent of 
                        such payment modifiers for providers within the 
                        same fee schedule area, as determined by the 
                        Secretary.
                    ``(D) Case-by-case hardship exemption.--The 
                Secretary may, on a case-by-case basis, exempt a 
                provider from the application of the negative payment 
                update specified in subparagraph (A) for a year if the 
                Secretary determines, subject to annual renewal, that 
                because of limitations in the nature of a medical 
                practice, limitations in the number of Medicare 
                beneficiaries that may be served by the provider, or 
                other special circumstances, imposing a financial 
                disincentive under such subparagraph for failure to 
                adopt an alternative payment and delivery model 
                referred to in subparagraph (B) would result in a 
                significant hardship to the provider.
            ``(18) Updates beginning with 2023.--
                    ``(A) In general.--The update to both of the 
                conversion factors for each year beginning with 2023 
                shall be 0 percent.
                    ``(B) Treatment of services paid using alternative 
                payment and delivery models.--In the case of 
                physicians' services for which payment is covered under 
                an alternative payment and delivery model, such as 
                those implemented under section 1115A, subparagraph (A) 
                does not apply.''.
            (2) Considerations in promulgating growth rates for 
        alternative payment and delivery models.--
                    (A) In general.--In determining the growth rates to 
                be recognized beginning with 2019 for alternative 
                payment and delivery models under the Medicare program 
                that cover physicians' services, such as those 
                implemented under section 1115A of the Social Security 
                Act, the Secretary of Health and Human Services shall 
                consider (among other factors) the following:
                            (i) Ensuring access to primary care and 
                        specialty services, including participation of 
                        primary care practitioners and specialists and 
                        newly graduating practitioners.
                            (ii) Restraining spending growth.
                            (iii) Ensuring access to services for 
                        vulnerable populations.
                    (B) Limitations.--In no case shall the growth 
                factor determined under this paragraph for a year--
                            (i) be less than 1 percent; or
                            (ii) be greater than the percentage 
                        increase in the MEI (as defined in section 
                        1842(i)(3) of the Social Security Act, 42 
                        U.S.C. 1395u(i)(3)) for such year.
                    (C) Application of congressional review act.--
                Chapter 8 of title 5, United States Code, applies with 
                respect to the promulgation of a growth factor under 
                this paragraph for a year.
    (h) Impact Report.--Not later than January 1, 2022, the Secretary 
of Health and Human Services shall submit to Congress a report the 
impact on spending and on access to services under title XVIII of the 
Social Security Act, including under part A of such title, resulting 
from changes to Medicare delivery and payment systems, including under 
the amendments made by this section.

SEC. 3. SAVINGS FROM OVERSEAS CONTINGENCY AND RELATED ACTIVITIES.

    (a) In General.--Section 251(b)(2) of the Balanced Budget and 
Emergency Deficit Control Act of 1985 (2 U.S.C. 901(b)(2)) is amended 
by adding at the end the following new subparagraph:
                    ``(E) Overseas contingency and related 
                activities.--
                            ``(i) Cap adjustment.--If a bill or joint 
                        resolution making appropriations for a fiscal 
                        year is enacted that specifies an amount for 
                        overseas contingency and related activities for 
                        that fiscal year after taking into account any 
                        other bills or joint resolutions enacted for 
                        that fiscal year that specify an amount for 
                        overseas contingency and related activities, 
                        but do not exceed in the aggregate the amounts 
                        specified in clause (ii), then the adjustments 
                        for that fiscal year shall be the additional 
                        new budget authority provided in that Act for 
                        such activities for that fiscal year.
                            ``(ii) Levels.--The levels for overseas 
                        contingency and related activities specified in 
                        this subparagraph are as follows:
                                    ``(I) For fiscal year 2013, 
                                $83,000,000,000 in budget authority.
                                    ``(II) For fiscal year 2014, 
                                $50,000,000,000 in budget authority.
                                    ``(III) For fiscal year 2015, 
                                $50,000,000,000 in budget authority.
                                    ``(IV) For fiscal year 2016, 
                                $50,000,000,000 in budget authority.
                                    ``(V) For fiscal year 2017, 
                                $50,000,000,000 in budget authority.
                                    ``(VI) For fiscal year 2018, 
                                $50,000,000,000 in budget authority.
                                    ``(VII) For fiscal year 2019, 
                                $50,000,000,000 in budget authority.
                                    ``(VIII) For fiscal year 2020, 
                                $50,000,000,000 in budget authority.
                                    ``(IX) For fiscal year 2021, 
                                $50,000,000,000 in budget authority.''.
    (b) Breach.--Section 251(a)(2) of such Act (2 U.S.C. 901(a)(2)) is 
amended to read as follows:
            ``(2) Eliminating a breach.--
                    ``(A) In general.--Each non-exempt account within a 
                category shall be reduced by a dollar amount calculated 
                by multiplying the enacted level of sequestrable 
                budgetary resources in that account by the uniform 
                percentage necessary to eliminate a breach within that 
                category.
                    ``(B) Overseas contingencies.--Any amount of budget 
                authority for overseas contingency operations and 
                related activities for fiscal years 2013 through 2021 
                in excess of the levels set in subsection 251(b)(2)(E) 
                shall be counted in determining whether a breach has 
                occurred in the security category and the nonsecurity 
                category on a proportional basis to the total spending 
                for overseas contingency operations in the security 
                category and the nonsecurity category.''.
    (c) Conforming Amendment.--Section 251(b)(2)(A) of such Act (2 
U.S.C. 901(b)(2)(A)) is amended to read as follows:
                    ``(A) Emergency appropriations.--If, for any fiscal 
                year, appropriations for discretionary accounts are 
                enacted that the Congress designates as emergency 
                requirements in statute on an account by account basis 
                and the President subsequently so designates, the 
                adjustment shall be the total of such appropriations in 
                discretionary accounts designated as emergency 
                requirements.''.
                                 <all>